Macy's (M) Shows Good Progress, But Not Good Enough (Update)

November 11, 2009 10:07 AM EST

(Update with comments from analysts)

Macy's, Inc. (NYSE: M) announced a smaller third-quarter loss than expected by Wall Street resulting from tighter inventory controls and localizing its merchandise by region. But despite the beat, guidance for the all-important fourth quarter, while raised, still fell short of Wall Street expectations.

The company reported a third-quarter loss of 3 cents, excluding the cost to consolidate several divisions and roll out the new localization plan. Macy’s earnings beat the analyst estimate of a 7 cent loss.

Company revenue for the quarter was $5.28 billion, which compares to the estimate of $5.24 billion. Revenue dropped 4 percent from the same quarter last year.

Macy's did raise its fourth-quarter earnings per share guidance from $0.70-$0.80 to $1.01-$1.06, which is still below the analyst forecast of $1.17. The forecast excludes restructuring charges. Shares have dipped 5.61 percent in early market trading today following the new forecast.

"Given the difficult economic climate, we had an excellent quarter. Our business improved progressively each month during the period and we are entering the holiday selling season confident in our locally-focused organizational structure and the high caliber of our talent," said Terry J. Lundgren, Macy's, Inc. chairman, president and chief executive officer.

The company reported an improved net loss of $35 million, compared to the loss of $44 million in the year-ago quarter.

Shares for the department store are currently moving at $18.31, down 6 percent.

Real-Time Market Moving News Two-Weeks FREE http://www.streetinsider.com/premium_content.php

Analyst Comments:
Deutsche Bank upgraded Macy’s to Buy on the weakness of the stock right now, while raising its price target to $26. The upgrade is due to the relatively conservative guidance that the company issued and that business improved progressively each month throughout the quarter.

Goldman Sachs maintained a Neutral rating on the company, also citing that the low single digit loss for Macy’s same store sales is a significant improvement on the previous 5 percent to 6 percent guidance given.

“We believe gross margins should provide ample offset to deliver upside to current guidance,” Goldman Sachs analysts stated.

Related Categories

Earnings
Guidance

Stocks Mentioned

Related Entities

• Deutsche Bank
• Citi

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?